Botswana Diamond Hub coordinator, Jacob Thamage, has expressed optimism that the diamond-cutting industry, which is currently experiencing liquidity and profitability pressures, will emerge stronger.
Speaking to Mmegi Business, Thamage said the pressures that local diamond cutters found themselves under, were not specific to Botswana, but were what currently prevails in the global diamond-manufacturing sector.
“While we are in discussions with some of the players in Botswana to find solutions, perhaps some solutions have to come from the global industry. Indeed the industry is concerned as evidenced by some rough diamonds producers recently lowering prices,” he said.
His comments followed the recent announcement that the Serowe-based diamond cutter, Teemane Manufacturing Company (TMC), which started operating in Botswana over 20 years ago, was shutting down, leaving more than 300 workers jobless.
As one of the country’s oldest diamond cutting and polishing companies, TMC is the first local casualty of liquidity and profitability pressures facing diamond polishing companies globally.
Thamage said the company’s closure was a ‘sad’ setback for Botswana’s efforts to grow value addition and create employment in the country’s emerging diamond manufacturing industry.
In spite of the setback, Thamage said the diamond industry, including in Botswana, ‘would ride the current wave and emerge stronger’.
De Beers Group of Companies midstream communications manager, David Johnson, said his company, which is the world’s biggest diamond producer, was focused on assisting in the creation of a sustainable cutting and polishing sector in Botswana. He indicated that the creation of a sustainable cutting and polishing sector is required for Botswana to experience long-term benefits from its domestic diamond manufacturing activity. “To date, we have been very successful in supporting the development of this sector, although there have been some recent retrenchments, the beneficiation programme has helped to support over 3,500 direct jobs
However, Johnson explained that it was a natural effect of commercial dynamics that certain businesses would grow while others would contract, in response to a constantly changing external environment. “While it is regrettable that sometimes businesses have to reduce or cease operations, we are confident that opportunities still exist in the development of the cutting and polishing industry in Botswana as evidenced by the setting up of operations in Gaborone by four new companies,” he said.
He further indicated that De Beers will continue to support the Botswana cutting and polishing industry with the supply of economically cuttable rough diamonds and will continue to work with government to find the most effective ways of supporting success in the domestic sector.
Due to depressed polished prices set against high rough prices, cutting and polishing companies globally are currently facing difficulties, with the 20 local manufacturers’ situation exacerbated by the comparatively higher labour costs.
High labour costs in Botswana’s fledging diamond cutting and polishing industry have always been perceived as a possible threat to the beneficiation efforts, as it renders local polished diamonds uncompetitive on the global market.
It is estimated that diamond cutting costs $12 (P114) to $25 per carat in India, $20 to $30 in China while in Botswana it costs between $60 and $65 per carat.
The 20 local firms buy rough diamonds from De Beers before cutting and polishing them, and selling them on the global market where polished diamond prices are said to be ‘very low’ compared to the high prices of rough charged by De Beers.